Wednesday, February 26, 2020

UK’s growth supplies optimism, but will hiring results follow?

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UK’s growth supplies optimism, but will hiring results follow?Whilst Lloyds Commercial Banking’s Regional Purchasing Managers Index noted job creation was hitting the highest levels in nearly 13 years, a separate study by the Chartered Institute of Personnel and Development (CIPD) has found little appetite for hiring in the middle-term.

Most employers are planning to take on new staff in the next few weeks, however longer-term strategies do not factor employment; and instead focused on improving productivity.

Less than one in five firms are currently planning to raise their staffing levels by a significant margin – even if growth picks up.

Specifically, only 17% of the 1,000 employers interviewed planned to increase staff levels by at least 2% over the medium term.

Growing optimism

The UK economy is widely expected to strengthen over the coming months, after the Office for National Statistics registered 0.8% growth in the third quarter of 2013.

But the rate of unemployment has remained high, and currently sits at 7.7%.

“Our data on medium-term recruitment intentions suggest that stronger economic growth in the next few years will not be accompanied by big rises in employment,” said CIPD’s Labour Market Advisor Gerwyn Davies.

As many employers have retained their skilled workers over the difficulty of the preceding years, they seem confident of achieving business objectives without new hires.

Instead, employers are focusing on raising productivity, with Davies noting, “the prospects of better economic conditions might therefore persuade them to invest more in the business and make more intensive use of existing staff.”

This could include increasing working hours, amongst other initiatives.

Short term gains

Whilst this may be cause for alarm for the middle-term, the results point to a spate of immediate hiring which could help many.

Optimism about employment is particularly high in both manufacturing and retail in southeast England, and Mark Carney, the Bank of England (BoE) Governor, is expected to state the BoE’s belief the jobless rate will fall to 7% earlier than previously thought.

This bares special relevance to the BoE, as it paves the way to higher interest rates, which in turn improves the UK economy.

The City has stated that interest rates should rise in either of the last quarters of 2014 – or potentially early 2015.

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